Saturday, December 12, 2009
There are several startups trying to figure out how to make hyperlocal news on the web profitable.
--There is Growthspur, which was launched with the slogan, "You Cover Your Community—We Help You Make a Business Out of It" and provides "tools, training, and networks" to local community news sites.
--There is Totalpaas, which is marketing its technology as a platform for use by community web sites.
--CNN just invested in a startup called Outside.In, which feeds neighborhood information to news sites.
-- Last summer, MSNBC acquired Everyblock, which feeds data like crime statistics to web sites.
--AOL owns the local news network, Patch.
Two weeks ago, I attended a conference at USC "Entrepreneurship and the Community Web" . In attendance were folks from more than a dozen community web sites across California. They ranged from the parent company of the San Diego News Network, which has raised $2 million to launch 50 networked local nets sites across the country, to a one man operation called Coastsider, where Barry Parr covers the community around Half Moon Bay, California, sells advertising, and even invites readers over for his annual holiday party.
It was exciting to see so much hands on experimentation and innovation going on.
The market is ripe, or so everyone seems to believe. There are certainly plenty of former unemployed newspaper journalists looking to become entrepreneurs, lots of online readers interested in news about their neighbors and their community, and loads and loads of local merchants who want to drive new customers to their outlets.
But is there a business model that works?
Can a local web site be profitable driven solely by traditional advertising dollars? I don't think so. Community Web publishers will have to be much more creative on the revenue side.
Most of the community news sites represented at the USC conference are barely breaking even, many are losing money.
Jonathan Weber, the former editor of defunct B2B magazine, The Industry Standard, and keynote speaker at the USC conference, was one of the early pioneers in local online news. He launched his New West site, covering portions of the Rocky Mountain states back in 2005. After four years, the company is now at breakeven. He drives significant revenue and profit from the event side of the business, sponsoring about four conferences a year. The events include continuing education credits in certain fields like real estate. But, local advertising, he said, is a "tough, tough game... We haven't cracked that yet."
Weber's experience in the B2B world taught him that revenue can come in all shapes and sizes, not only advertising: conferences, trade shows, webinars, rental of email lists, custom publishing, Continuing Education credits--these are all things that the B2B world routinely includes in its panoply of services, but are strangely absent or low priority in the B2C world of newspapers and magazines.
There are tens of billions of dollars being spent by local retailers on "traditional" products: direct mail, newspaper inserts, bus bench advertising, hand-delivered coupons, yellow pages, and specialized print publications. All of this money is up for grabs, and everyone is going after it--Yahoo, Google, restaurant.com, online coupon companies like savings.com and bogopod.com, or user review sites like Yelp. (Just today WSJ's All Things Digital reported that Google was in talks to purchase Yelp for more than $500 million.)
No one has quite figured out how to move all that revenue from print products to digital products. Keyword, cost-per-click advertising is certainly taking a big hunk of it already, and that has the advantage of being a "self-serve" advertising buy, with vendors bidding for spots online. But for the rest of it to move to community news sites, or restaurant review sites, or online couponing plays, there is one crucial element: SALES.
It's all about sales. Sales, Sales, Sales.
With small and medium size businesses, the owner is often the marketing director, the sales manager, and the HR specialist all in one. For example, a restaurant owner probably works most nights in the restaurant, and can't afford the time to do a serious analysis of the most cost effective marketing efforts. So that person buys an ad in the local throwaway, or a newspaper or a coupon magazine. If it works--whatever that means--they stay with it for awhile. The critical ingredient in all this is the sales person representing the media outlet. The sales person becomes the marketing consultant, the adviser who helps the business person sort through the options.
All those print outlets use sales people,usually both "inside" and "outside" representatives. The sales cost is high (as a percentage) but the price of the advertising is high also so it works. On the web, the price of the advertising is low, and it's difficult to make the sales equation work. That's the real challenge all these community news sites will face--not gathering local news, not collecting crime statistics, not finding good writers to contribute--but making sure the sales operation runs well and is cost efficient.
So here are a few tips from my years of overseeing advertising sales organizations:
--There is high turnover of sales people. It's a difficult job, and the good ones often leave for greener pastures;
--Relationships are important. Even with the enhanced measurability of response from the Internet, you are still selling an intangible, and the buyer needs help understanding what he's getting;
--Use the telephone. A lot of selling can get done on the phone. You don't have to always meet in person.
--The only way to sell a lot is to sell a lot. You've got to make a lot of calls and be prepared for a lot of rejections.
--Advertiser churn is a given. Advertisers stop spending for a while, begin again, change advertising vehicles, try something new, and come back. That's why relationships are so important.
--There is a lot more to sell than advertising. You are educating the advertiser about how advertising works, the most effective way to market, the right pitch, and even the need for marketing in the first place.
Great sales teams and creative ways for local merchants to spend money--not just relying on traditional banner advertising--will be the key to success.
Wednesday, November 4, 2009
Under the headline "DVR, Once TV’s Mortal Foe, Helps Ratings," the New York Times reports that "nearly half" of all people who watched DVR-recorded shows still watch the commercials. With DVR penetration at about 33%, this is a very meaningful issue to television advertisers. I've said for a long time that when the DVR penetration passes 50% the TV industry is going to face a massive profitability crisis based on declining revenues (driven both by price and volume).
The source for this nonsense is Nielsen, whose spokesman says it all makes sense because TV is a "passive media", thus explaining why so many people would not press the fast forward button to skip the ads.
I know it's dangerous to take your own behavior and extrapolate it to all others. But I know I record shows PRECISELY so that I don't have to watch the commercials, and only pause to see the latest ones from Apple because they are so entertaining.
And my guess is that almost everyone else is doing the same thing, no matter what Nielsen has to say about it.
What do you do?
Wednesday, October 7, 2009
But it was several months of silence before that. What gives? Well, it turns out writing a blog ain't so easy. First, you have to decide, are you going to be one of those prolific bloggers like Jeff Jarvis, who twitters dozens of times a day, or are you going to be one of those infrequent, but profound commentators, like Clay Sharkey.
The pressure to be profound was just too great, and the pressure to be on top of the news was also too much for me. So I'll compromise. I won't be profound, and I won't write frequently. I'll just write once in awhile, try to say something understandable, and spell the words correctly. Now that I've gotten that out of the way, give me a week or two to come up with something to say.
Friday, July 3, 2009
I don't know Russ Stanton. But I know John Arthur. And his departure is yet another nail in the coffin of the Los Angeles Times. The "velvet coffin"--a term used to describe the place in the 80's and 90's--has become a real empty coffin, just waiting for the body.
John and I worked together when he was editor of the Valley Edition of The Times, and I was its president. I've continued to keep track of his excellent work ever since. I count him as a good friend.
He is a journalist's journalist. Not flashy. Solid. Analytical. Aggressive, but thoughtful. The fact that the Los Angeles Times will no longer have him around to decide what news goes on the front page means that its readers will be short shrifted, and the reporters and editors there will lose a great mentor and teacher.
Perhaps it is inevitable, this continuing drain of top-notch talent out of the print newspaper business. But it's not fun to watch.
Thursday, June 11, 2009
Thursday, June 4, 2009
Saturday, May 16, 2009
To all those bloggers and "citizen journalists" who, if you believe the Internet, are this close to reinventing the industry, here's your opportunity.
Now is your chance to cover never-ending board meetings, make Freedom of Information Act requests to dislodge facts from public officials, call sources - you have cultivated sources, right? - and otherwise do what we in our dying industry like to call "reporting."
To do it right, you'll have to work eight to 10 hours a day, five to six days a week.
If it sounds like a job, not a hobby, it is. But don't expect to get paid; apparently, that business model has been discredited.
We're rooting for you. Public officials need vigilant scrutiny if our dollars are to be wisely spent and public policies are to be sane and progressive. So good luck with that.
Big difference, huh.
Today's New York Times tells a similar story for a much bigger site, hulu.
"Does Hulu, the Web’s most popular place for TV viewing, reach nine million people a month or 42 million? Millions of dollars in advertising revenue may hinge on the answer. But no one seems to know for sure how big the site’s audience is."
Nine million or 42 million????? That's like saying the circulation of the New York Times might be 800,000 or 4 million? You'd think you might pay a different price for advertising, depending on which one it was!
It's a problem that the industry has been wrestling with for some time. "The web has been around for more than 10 years as a medium, and it's been called the most measurable medium in history. Yet, web publishers at large media sites such as CNN.com or NYTimes.com have been dismayed to see that their direct counts of web visitors measured from their servers vary so wildly" from those reported by various measurement firms, says Mark Glaser.
It turns out that web measurement firms rely on two basic approaches, panel and census based. In simple english, the panel approach is similar to what has always been used for television or radio--track the habits of a supposedly random representative group and then extrapolate to the entire population. The census approach tries to track actual usage from the servers (but then has overstatement problems of its own because it might include counts for automated search spiders, spyware traffic and the like).
This may seem like inside baseball, but if I'm a media buyer and I can chose between a site that has 500,000 unique visitors or ten million, for the same price, it would be an easy decision, except that it's the same site.
The wildly divergent numbers demonstrate the nascency of the market for online video measurement. It’s “still the wild wild West,” said Rob Davis, a leader of the interactive video practice at OgilvyInteractive.
We are still at the infant stage for new media, still figuring out what the data means, how "efficient" it really is, and what it's worth. In the meantime, you can trust that the good sales people will be telling the best story--the difference from yesteryear is that instead of having to rely on the numbers brought in by the friendly radio ad sales person, you can go up to the web yourself and find whatever numbers you want.
Saturday, May 9, 2009
“There is something in our collective DNA that makes us want to sip our coffee, turn a page, look up from a story, say, ‘Can you believe this?’, and pass the paper across the table.”
“Sure, you could hand them your BlackBerry or laptop…but the instinct is different. And who wants to get butter or marmalade on your new MacBook Pro?”
Reminds me when I told an interviewer ten years ago that you couldn't bring your computer with you into the bathroom to read.
Maybe that's true for folks in our generation, but not for our kids.
They'll be sharing their new large-size Kindle across the breakfast table.
Saturday, May 2, 2009
...his view on the future of the newspaper industry is dismal. “For most newspapers in the United states, we would not buy them at any price,” he said in response to a question about whether he would consider investing in newspapers. “They have the possibility of going to just unending losses.”
He continued," They were essential to the public 20 years ago. Their pricing power was essential with customer. They lost the essential nature. The erosion has accelerated dramatically. They were only essential to advertiser as long as essential to reader. No one liked buying ads in the paper - it’s just that they worked. I don’t see anything on the horizon that causes that erosion to end."
So what did I miss? What happens if one misses all those tweets, those banal talking points on cable news shows, the posting of countless new photos?
When I used to work full time, and I'd leave on vacation, I'd stay until midnight the night before I left to empty my "in box," page through all those magazines and memos and spreadsheets. I would go through them (many that had been sitting there for weeks) and feel like I was leaving a clean desk. When I'd return two weeks later, the desk would be piled high with newspapers, magazines, reports. The email "in box" would be overloaded. And I'd start to wade through much of it, but never get very far.
That's OK, for a vacation. But how do you filter through all the excessive information we now have. Where are those old curmudgeonly filters, newspaper and magazine editors?
The amount of information we have at our fingertips is just too much. Way too much. If we miss a day, we can't come back and read the inbox, we can't catch up, or at least it feels that way.
Commentator and former newspaper reporter John Reinan captured the point:
"The volume of information is growing beyond our ability to process it.
All of the recent advances in information technology, it seems to me, have been aimed at increasing the amount of information available to us. I think we're reaching the point when we need some technology that helps us filter, sort and make sense of the river of data that we swim in every day.
There used to be something like that. It was called a newspaper.
I have, with great sadness, accepted the idea that newspapers as we've known them may not be with us much longer. I'd love to be proven wrong.
But I believe people still want what newspapers have provided: a sense of being presented with important, useful and enjoyable information, culled from many sources and thoughtfully organized.
Like Clay Shirky, I don't know what online form that might take. And given the economics of the Web, it may be that nobody can make a living producing it.
As is so often the case in a revolution, the only thing certain is that nothing is certain.
We now have all kinds of new filters on the web, Amazon tells us what books we might like, Netflix tells us what movies to watch, Twitter links to stories read by others whom we respect. And some of those enterprises have even figured out how to make a lot of money helping us decide.
But there are still days when I yearn for a big pile of paper on my desk.
Thursday, April 23, 2009
A few weeks after the interview, I received a call from a woman who identified herself as a "fact checker" for the magazine; she wanted to confirm a few facts in the article--most were right, a few needed to be tweaked.
It all seemed so quaint.
Who has time and the finances to support a fact checker? Not in the current world of immediate blogging. We rely on "user generated content" online, in real time, to correct the "facts."
Way back in 2003, in the July/August issue, the Columbia Journalism Review, ran a piece by a "fact checker" that explained how necessary it was for even that reputable magazine to have fact checking. Ariel Hart wrote that in her three years of fact checking, she had never found an article without errors, and that the piece with the most errors was one from a Pulitzer Prize winner.
It turned out that the article she "fact checked" with the least errors was "written by a former Los Angeles Times lawyer." (Yup, that was me.)
As the magazine business model changes, the few remaining fact checkers will be eliminated from newsroom budgets, if they haven't been already. Which will eventually make the magazines no more credible that a web site, I suppose. (But without the corrective impact of online comments!)
Yet, another reason that the print model will slowly wither away.
What do you think?
Friday, April 10, 2009
Well, running a front page advertorial is not gonna do it.
The Los Angeles Times has many of the same problems as any big city metropolitan newspaper, except that it's parent company, Tribune, is in bankruptcy court, and in the last twenty years the average tenure of one of its publishers has been about two years.
I asked the students in my graduate course on media business strategies at USC's Annenberg School (they are receiving a masters in management and communications) what factors have contributed to the downfall at the Los Angeles Times, and then gave them the assignment of writing a memo to the publisher advising how to fix the paper so that it could grow and sustain itself.
The students, all generation Y twentysomethings, (all of whom "live" on the web and rarely read print publications) came up with a list of factors that are causing the demise of newspapers generally, and then a separate list of those factors unique to the Los Angeles paper. Generically, newspapers are all dealing with the following, they said:
--Resistance to change
--Classified categories hurt by economy and internet
--Lack of relevance
--Lack of timeliness
--Online searching more effective
--Internet offers diversity and no geographic boundaries
--Internet has unlimited ad inventory
--No time to read
--Web has targeted, measurable and effective advertising
--Family rituals (e.g. reading at the breakfast table)disappearing
--Mass media doesn’t work anymore
--Free is better than cheap
As far as those things that were unique to the Los Angeles Times, they came up with:
--Role of the Chandler family
--Los Angeles itself (complex, diverse market with 85 cities)
--Ridiculously high debt
--No mass transit
--No national edition or strategy
--Arrogance and risk averse culture
It's a lot easier to explain the problem than to come up with a solution, but here are some of their (sometimes overly simplified) cures:
"There is no ownership continuity and no sense of personal responsibility."
Acknowledge that print is dead. "It's not challenged, and it's not struggling--it's dead and ready for internment."
Phase out the print newspaper.
Modify the print product to a slimmed down "express" newspaper that directs readers to the web site for the full story.
The print edition will be no more than "fries accompanying the burger."
Raise circulation prices, make consumers pay for the luxury of delivery.
Plan to publish a print edition once, or maybe only a couple days, per week.
Buy the Los Angeles Daily News and get consolidation savings.
Develop a lean overhead and a local, conversational focus.
Develop a Lakers fan application for mobile devices, using Sports section content.
The LAT web site is unimpressive, not creative, does not allow for enough interactivity and isn't translated into Spanish.
Partner, partner, partner.
Be the authority on local.
Offer one stop integrated advertising for print and web. Buying advertising "should be no more difficult than shopping at Amazon.com"
Monetize white papers, research papers, and in depth analysis with selective consumer pay models.
Develop new revenue streams from delivering news content and geo-specific advertising to mobile and other devices.
Expand audio visual advertising formats on the web.
One student summed up the challenge: "Turning the Times around and preparing it for the next wave of information technology innovations require more than strengthening the Times online presence and using the same old print business model to bring in the revenues....The Times has to watch the technology market closely, collaborate with device makers, be on the forefront of the art and science of digital delivery (e.g., user interface designs), and begin developing revenue models for a range of scenarios."
Sunday, April 5, 2009
I've had the exact opposite experience reading blogs and web sites. I learn a lot from not very well known, but sometimes very smart observers. Yes, the original beat reporting may not be as well done, (or could even disappear given the economic state of newspapers and that is a problem) but on the web you can get information directly from the horses mouth, so to speak.
I agree with Robert Niles latest post: Newsrooms can't expect j-school graduates with one 200-level econ course to their credit to be able to attract an audience covering the business beat when they are competing with bloggers who have PhDs in economics, or years of industry experience.
Yes, the reader has to ferret out the bias, understand that a particular blogger may have an ax to grind, or an industry to protect, but the ability to actually get at the raw data, the survey results that the journalist summarizes, the congressional report that the reporter references, make the internet a better source of accurate information in the long run; it's just that you don't have an editor as gatekeeper or proof reader to guard against mistakes, bias and omissions, so you have to do it as a critical reader. Yourself. And that's a little more time consuming, but not so awfully bad.
Wednesday, March 25, 2009
Craiglist is a strawman, he says, and supports his thesis by pointing out that newspaper classified ad revenue in 1994, nationwide, was $12.5 billion, and increased to $14.2 Billion in 2007. But if he'd chosen a different starting year, you'd see a very different picture. He says he chose 1994 because that was when web advertising was first launched. But Craigslist and other online classified vehicles like monster.com didn't get going until years later. Between 1997 and 2006, newspaper classified ad revenues declined from $16.7 billion to $14.2 billion, according to the Newspaper Advertising Assn., the same source Ross used. That's a 15% decline. And between 2000 (when the online classified world was starting to take off), when the revenues had soared to $19.6 billion, and 2006, the decline is even more pronounced--a 28% decline.
There is no doubt that the recession is accelerating the demise of the newspaper business model, but it was going to happen anyway. Print products are losing both sets of customers, their readers and their advertisers.
Unlike magazines, classified revenue is an important revenue stream for newspapers, making up 20% to 40% of all revenues historically. And that's why newspapers are in more trouble than magazines at the moment. Newspapers have lost classified revenue, and will never get it back (the internet is just a much more efficient medium to find a job, a house, or a car), but they are also losing readers to the internet as well.
The demise of print is happening to newspapers first because of their revenue and profit structure. Not only are classified revenues a big piece of the pie, they are the most profitable portion of the pie, with profit margins as high as 80%. In the mid-nineties, the Los Angeles Times made more profit on its classified section alone, than the entire enterprise. Let me repeat that. The classified sections made money, everything else lost money--they were loss leaders for classified!
Trust me, when a third of your revenue pie is down 30% and continuing to head south, you can kiss that business model goodbye.
Thursday, March 19, 2009
"In January, Nielsen ranked seattlepi.com among the top 30 newspaper Web sites with 1.8 million unique users. The site has an average of 4 million unique monthly visitors, according to internal Hearst tracking."
A hundred times better than the numbers I saw. If they can monetize those four million unique visitors at 25 cents per visitor per month, that would be a $1 million a month in revenues. And they'd have a real chance at profitability.
Roger seems quite confident that the online only operation can be a financial success.
We're all rooting for ya, Roger.
Wednesday, March 18, 2009
Michelle Nicolosi, its "executive producer" (revealing title) explains the experiment this way: The creation of seattlepi.com as a standalone digital news and information business is a great opportunity for us to try out many of the theories journalism professionals and academics have been throwing around for the past few years.
SO WILL IT WORK. CAN AN ONLINE LOCAL NEWS ENTERPRISE, STAFFED WITH REAL JOURNALISTS, WORK....THAT IS, BE PROFITABLE.
The topic is certainly the rage. I've gotten several emails in the last few days urging me to help start such ventures. And there is no doubt that the local news/local information category is still a wild frontier on the internet, with no one yet proving out a business model that is sustainable and can make long term sense.
Last week, Rick Wartzman, a former Los Angeles Times reporter and now director of the Drucker Institute at Claremont Graduate University, argued in a Business Week piece that renowned business scholar Peter Drucker would "have called for something that has, by and large, been missing from the scene: a genuine boldness and decisiveness of action by top management. To stop the red ink, newspapers need to get rid of the ink altogether. It's high time for online-only operations."
He goes on to say: The Web needs to be embraced much more fully than most papers have done. This means no more tentative, halfway initiatives. Dead-tree editions must immediately yield to all-Internet operations. The presses need to stop forever, with the delivery trucks shunted off to the scrapyard.
I generally agree with the thought, but I'm still worried about whether the numbers work.
Wartzman talked LA Times editor Russ Stanton into running the numbers for what a web only operation would look like at his newspaper. Stanton said that they'd need only about 275 total employees (and only 150 from the newsroom--I imagine that made a few of the 600 people left in the newsroom there a tad nervous) to run a profitable online operation. With 275 employees, total compensation costs including about 20% for taxes and benefits, would total around $23 million. If salary costs total half of total costs, and that's probably conservative for a web only operation, the online operation would only need $46 million in revenue to break even. And if the actual revenues for online operations at the newspaper are about $80 million, as some people have suggested, then you've got a nice profit margin, and $34 million of cash in your pocket. A good solid business, but nothing like what it was; it's a lot less than the $100 million in cash flow The Times probably made last year, and far less than the $250 million plus it had been making in years past.
But the real question is not whether a heavily trafficked site like latimes.com, or usatoday.com could make money on their own--I have no doubt they can--the more challenging issue is whether the transition can work for a community newspaper. Many such newspapers--but not the Seattle PI which was losing money--routinely operated with a 30% profit margin.
I tried to recreate the Seatle PI's financial pro forma with the aid of a calculator and the back of an envelope. What I really needed was my old company CFO Stu Coppens (Stu where are you when I need you?)but the picture I came up with is pretty grim, if they just take the old fashioned approach of cpm (cost per thousand) based online banner advertising. Here are the numbers (and who knows if I am even close or even in the ballpark...)
The Seattle PI has said they will have 40 employees, 20 in the newsroom, and 20 selling ads. (They still need some management, and someone to do accounting, so I've added another 5 people). I estimate that total salary costs for those folks, including an 18% factor for taxes and benefits (less rich benefits than at the LA Times), will be around $3.5 million. (The ad sales folks get paid substantially more than the reporters, reflecting the real world.) So let's double that and say the total costs for the enterprise are $7 million ( and you could probably run it for less). Then in order to make any money, the new online web site has to generate at least $7 million.
That may be the hard part, unless the site changes and attracts a lot more page views, or there is a lot of creativity on the revenue generating side.
According to compete.com, total visits to the SeatlePI. com have been running about 140,000 visits a month with only 30,000 unique visitors. Average visit time is less than 30 seconds, and less than 1.5 pages are viewed. Not Good. At a $20 cpm, with three ads running on a page, and selling all the inventory, total revenues for the year will be less than $1.5 million, by my rough estimates. If my estimates are wrong, somebody tell me (especially old friend Roger Ogelsby who is the publisher), but if not it suggests that they've got to drive up the cpm to rates advertisers generally pay for targeted, niche communities (say over $60 a thousand), get real creative with sponsorship packages for microsites, promotional contests with advertisers who might be willing to pay for reader engagement, and the like. (Note: Roger did get in touch and my traffic stats were wrong. See correction in blog entry above.)
Remember, however,in this particular case, the Seattle's number two newspaper was already apparently losing $14 million a year for Hearst, so at least they may have reduced the losses, and given local news on the web a chance.
As all TV journalists love to say, "only time will tell" whether this experiment works. In the meantime, I'm very interested in any and all comments (especially from Roger and Stu)!
Saturday, March 14, 2009
“The Wall Street Journal has a paywall, so we can too!” (Financial information is one of the few kinds of information whose recipients don’t want to share.) “Micropayments work for iTunes, so they will work for us!” (Micropayments only work where the provider can avoid competitive business models.) “The New York Times should charge for content!” (They’ve tried, with QPass and later TimesSelect.) “Cook’s Illustrated and Consumer Reports are doing fine on subscriptions!” (Those publications forgo ad revenues; users are paying not just for content but for unimpeachability.) “We’ll form a cartel!” (…and hand a competitive advantage to every ad-supported media firm in the world.)
. . . .
Round and round this goes, with the people committed to saving newspapers demanding to know “If the old model is broken, what will work in its place?” To which the answer is: Nothing. Nothing will work. There is no general model for newspapers to replace the one the internet just broke.
. . . .
Print media does much of society’s heavy journalistic lifting, from flooding the zone — covering every angle of a huge story — to the daily grind of attending the City Council meeting, just in case. This coverage creates benefits even for people who aren’t newspaper readers, because the work of print journalists is used by everyone from politicians to talk radio hosts to bloggers. The newspaper people often note that newspapers benefit society as a whole. This is true, but irrelevant to the problem at hand; “You’re gonna miss us when we’re gone!” has never been much of a business model. So who covers all that news if some significant fraction of the currently employed newspaper people lose their jobs?
. . . .
Society doesn’t need newspapers. What we need is journalism. For a century, the imperatives to strengthen journalism and to strengthen newspapers have been so tightly wound as to be indistinguishable. That’s been a fine accident to have, but when that accident stops, as it is stopping before our eyes, we’re going to need lots of other ways to strengthen journalism instead."
Wednesday, March 11, 2009
This 1993 promotional video explains how the Los Angeles Times Valley Edition was put together each day. And yes, that's me in there, a little younger, and sporting a moustache....
Monday, March 9, 2009
But some of the most perceptive comments come from Kathy E. Gill, in WiredPenn:
"I think that if I hear another newspaper person utter this phrase — no more free content — I will scream. It’s either that or shoot the guy. (It’s almost always a guy.)"
She correctly notes that paid content is a myth. "when you buy a subscription to a newspaper, are you 'paying for the content'? No. You are paying for the delivery of the content. Maybe."
When I was in charge of the circulation department at the LA Times ten years ago, the revenue we earned from subscriptions and street sale copies didn't come close to covering the cost of ink, paper, manufacture, and distribution. The newsstand and subscription price has come up a lot since then and the costs have gone down (much smaller circulation means less paper, fewer delivery trucks, more efficient printing) but I'm sure that circulation revenues don't cover much, if any, of the cost of the newsroom. So what you are paying for the newspaper is really paying for the "convenience" of having it delivered to you or available outside your favorite coffee shop. Not the content.
The real dilemma is that print advertising dollars translate into digital advertising nickels. The cost per thousand is much lower on the web, where ad inventory is huge, and competition for readers is worldwide, rather than limited to a specific geographic boundary, and measurement of advertising impact is much more meaningful. And this is not just a problem for newspapers, but particularly for the Television industry. Several years ago, an IBM research study framed it correctly in its study: "The end of advertising as we know it." (Based on interviews with 2400 consumers and 80 advertising experts.)
Instead of whining about giving away their content for free (most of which is based on wire service reports and available on countless web sites), newspapers should be thinking about different revenue opportunities. They should take a cue from the B2B publishing industry, which developed and monetized lead generation tools, white papers, webinars, trade shows, email newsletters and the like. Check out the comments of B2B web innovator Colin Crawford on this
Saturday, March 7, 2009
"My take: I’m not so sure newspaper execs saw the Web coming, though they should have. And I’m utterly convinced they didn’t try everything they could. Why? Because they are still not trying everything they could.
I think newspapers were a bit like teenagers. They saw themselves as invincible. That big bad Web can’t hurt me. So with blinders on they kept doing the same ol’, same ol’ even as circulation continued to drop.
Sure, they tried small tweaks.
I remember when putting a graphic with your story was going to save journalism, and all the reporters complained just like they do now about social media or blogging. And then it was writing stories with bullets like a big list. Or using a narrative voice. Or skipping the story completely, and just running a graphic.
But there was no dramatic shift in thinking.
When the Web seemed a force to be reckoned with, newspapers threw up Web sites that looked just like the newspapers — but online. At first some charged for content, but most abandoned that.
But they didn’t study the Web or understand its power of interaction. They didn’t invent ways to reach readers online or figure out how readers were using the Web. They didn’t charge their smartest employees with coming up with ways to make money on the Internet. They shrugged it off because though circulation declines had been going on for years, they were still making money the old-fashioned way, in print."
Thursday, March 5, 2009
It sure seems to me that the mainstream media have gone twitter crazy. Turn on the TV day or night, and some CNN Anchor or political pundit is talking up "twittering." I thought maybe it was only my perception, like when you buy a new car. You buy a Toyota Camry and then all you see on the road are other Toyota Camry's, somehow confirming your purchase decision. I started twittering about a month ago and saw twitter everywhere I turned. But I guess, it was not only my imagination. Even Jon Stewart is making fun of all the ruckus. Oh, and even though Twitter has no revenue model yet, it's already raising tens of millions of dollars in venture money.
And I'm still trying to figure out what it means to twitter. And whether it's worth my time or not. (Of course, I will link my tweet to this blog post.)
Wednesday, March 4, 2009
Nevertheless, it does amaze me that the local newscast has hardly changed in the face of changing habits and technology.
My biggest pet peeve is this constant effort to "go live." Enough with the "live" shots already. A celebrity is admitted to a hospital at 10 AM. So on the 10 PM News, there is some idiotic reporter standing outside the hospital in the dark reporting on what happened there 12 hours earlier. Do TV News Directors really think that the audience somehow feels "closer" to this story because they sent a reporter to stand out on a street corner where some event took place hours before?
Just because we have the technology to deliver "live" news doesn't mean we should be excessive about using it. Use it when it makes sense. When the story really is live. Instead of wasting time on the live shot, use your reporting resources to actually report, and then come back to the studio and tell us about it.
The local newscast has got to change. More later.
By Elizabeth Malloy,
"With the closure of Denver’s Rocky Mountain News on Friday, a long predicted scenario appeared closer than ever to becoming a reality: the extinction of the big city newspaper.
Journalists bemoan the death of metropolitan papers because, they argue, it saps the citizenry of an objective source of news about the world around them. That, and these papers take hundreds of jobs with them to the grave.
But it’s not just the information landscape that changes when a big paper collapses; it’s also the world of marketing. Once inseparably intertwined, some experts are predicting that the world of news reporting and advertising might be parting ways.
“It’s not really a crisis of journalism,” said Geneva Overholser, the director of the school of journalism at the University of Southern California’s Annenberg School for Communication. “It’s a crisis of what is effective for advertisers.”
Newspapers traditionally generate the vast majority of their revenue from ads. The price subscribers and other readers pay for the paper only covers about 20 percent of the cost, according to Overholser, a former editor of the Des Moines Register who also worked for the Washington Post and The New York Times.
... the state of newspapers brings to mind an old advertising term: marketing myopia. That’s when an organization’s vision of what it wants to do for a business is too narrow. In wanting to simply deliver news and inform, she said, newspapers kept their scope too small.
Maria Kniazeva, an assistant professor of marketing who teaches graduate courses at the University of San Diego, however, said most advertisers haven’t yet harnessed the full power of the Internet.
She said not enough advertisers have fully realized the drastic change of reading habits that have occurred in the last 10, even five years. The large captive audience of a newspaper is gone.
“We snack on information,” she said. “We are not committed.”
...Overholser, the director of USC’s school of journalism, said she still worries about general news finding the support it needs in an environment that is so driven by specific interests.
“General news has a way of not being very advertiser friendly. What kind of ads do you put next to a story about a fire?” she said. “I do have confidence in this: That is, nobody has figured out yet in the journalism world how to pay for general content, and no one in the advertising world has figured out what the next model is.”
Jeff Klein, an adjunct professor at the Annenberg School at USC, pointed out that so far, the newspapers that have closed or could potentially close soon are in regions with two papers. Denver still has the Denver Post, which was larger than the Rocky Mountain News even before the close. The Bay Area has several papers. The Seattle Post-Intelligencer is struggling, but it has always been smaller than the Seattle Times.
Though in San Diego, there is only one general interest daily, and The San Diego Union-Tribune has been for sale since last summer with no reported buyers.
Klein said ultimately, advertisers and news agencies just might not need each other any more.
Advertisers can go to direct marketing and Internet sites like the many social networking organizations. For people who still want to read good reporting, different models are springing up, he said.
He mentioned the new wave of nonprofit news organizations. He also spoke of a Web site in San Francisco called spot.us where people donate money in order to have specific stories written. For example, if you’d like to see an investigative report on the Oakland school system, you’d donate $20, and hope others would too, and a journalist will write it.
“There will still be reputable news organizations,” Klein said. “They just won’t be called newspapers.”
Monday, March 2, 2009
"One inescapable conclusion of our study is that our cost base is significantly out of line with the revenue available in our business today. It is equally inescapable that during good times our industry developed business practices that were at best inefficient.
YA THINK? Ya had to have a study to figure that out?
"Nobody who asserts that newspaper execs have been arrogant and stupid will ever print a retraction. But as a print refugee (Newsday), I can tell you management saw the Web threat coming for a long time and tried everything, too much, to cope -- all to no avail...
The problem is that nothing works, apart from bypassing the industry model and starting from scratch...
But the Web is killing papers, with or without the intervention of idiotic (or inspired) management."
He's only partly right. Newspapers as they currently exist may disappear, but newspaper companies didn't have to. Management has played a big part in the demise.
The challenge is taking an old media company (think record company) into a new world (think itunes). It is far easier to start from scratch, without legacy employees and ways of doing things, fears of cannibalization, or reluctance to change.
But lots of companies have remade themselves, just not newspaper companies. It's not easy and there is a serious risk of failure. Management has to throw out sacred cows, have a clear strategy, and then only keep the people on board who buy into it. And be relentless.
Newspapers had to stop thinking of themselves as the MASS MEDIA in a world of niche, targeted marketing and advertising. Newspapers had the content, just didn't use it wisely. Instead of thinking of the sports section as a mass media vehicle, think of it as a conglomeration of niche markets, those who are interested in golf, basketball, or football. Take all the content--you've got tons of it--in each area and reconfigure it for microsites and email newsletters on specific topics--then go after advertisers who never think of buying the newspaper, but would want to reach golfers to sell them clubs, or the specific demographic audience that likes soccer or baseball. And because the audience is targeted, you can charge a much higher CPM (cost per thousand).
I don't pretend to have all the answers. But I don't believe in inevitability.
Saturday, February 28, 2009
Recession? Local news sites are hanging tough
He's talked to several former journalists who are making a "for profit" go of it with local news sites. Real journalism. Real money.
Spend five minutes watching this You Tube Video credited to Karl Fisch, Scott McLeodfrom, and Jeff Brenman and you'll be amazed at the pace of change in technology, demographics, work place and consumer habits. It took 50 years for Radio to reach an audience of fifty million, TV took 13 years, but it only took Facebook two years to reach that kind of audience (its audience is now almost four times that size--and Facebook did it without any ADVERTISING).
The amount of information available to all of us is literally overwhelming. On the one hand, we want someone to help us sort it out, the job editors historically did, but at the same time, we want to do it ourselves, using filters provided by Google, Amazon, Netflix, and the like.
We don't trust the gatekeepers anymore, but we bemoan the loss of experienced newspaper editors. We want to "know" without being "told", but don't trust the anonymity of the web. Figuring out the right business model, one that builds on those mutually exclusive desires, and takes account of the rapidity of change and revolutionary technology, now...that's the challenge isn't it?
Wednesday, February 25, 2009
--Still a Newspaperman
Several reasons, really. The economy, particularly the slide in retail spending and related advertising. The internet, which "spiked" newspaper classifieds. Irrational bankers, and all the money they loaned based on unrealistic growth projections. And in some cases, greed.
Philadelphia. Seattle. Los Angeles. Minneapolis. San Francisco (See the latest WSJ story on possible closure of the Chronicle) . In all these cities, papers are either facing bankruptcy or already there.
Much of the immediate problem has to do with the heavy debt on those institutions. It is amazing to me that banks loaned such HUGE amounts at incredibly high multiples of EBITDA(cash flow). They did it before 2001 (my company benefited from it) and then even after losing millions in the last downturn, they did it again. Not anymore.
Didn't anyone at these banks think the economy might sour or the internet might devastate the print business. (Oh that's right, those were the same bankers making home loans to people without proof of any income.)
Didn't anyone at those newspaper companies think they might not be able to service the debt?
Alan Mutter's Reflections of a Newsosaur offers an excellent summary of the debt of major newspaper companies. Particularly like his Default-O-Matic chart. (Above.)
I've had some personal experience with the problems of huge debt and declining cash flow. It ain't fun. But it can be overcome.
In 2001, our B2B publishing company, 101communications, which exclusively served the technology marketplace, faced a severe meltdown in advertising spending. Then in the aftermath of 9/11 folks stopped traveling to our trade shows. And the anthrax scare killed our direct mail, list rental business. We had $50 million of debt on the business and couldn't make the interest payments.
But we survived. We learned to distinguish between "essential" and "nice to have". We had to downsize by 30%, and stopped publishing six of our 16 magazines. We renegotiated our debt. And the reality of a possible bankruptcy made us aggressively shift to web publishing and innovative ways to attract internet revenues. Then we grew profits at a rate of more than 20% per year for about five years. So it is possible to survive, recover, and thrive.
Unfortunately, it may be too late for some of our newspapers.
-From my "Executive Perspective" column in December 2008 issue of Folio: magazine.
In case you missed it, here's the full column.
“I’ve never seen anything like this before.“
That, it seems, is a common refrain in the halls of publishing and Internet companies across the nation. (Not to mention auto dealerships.)
My, but don’t we all have short memories. Where were you on September 12, 2001? Not only were advertising budgets slashed in the weeks following the 9/11 attacks, but travel budgets disappeared overnight, and folks were afraid to fly to trade shows and conferences.
I’ve lived long enough now to remember vividly several so-called “unprecedented” downturns in the economy: The 1987 market crash. The 1991-92 advertising recession, made even worse by the Persian Gulf War, as consumers stopped spending. The 2001 NASDAQ slide down a steep cliff. The virtual freeze on spending, traveling, and advertising that followed 9/11.
In each case, publishers who relied on advertising had to wrestle with a seemingly sudden and severe downturn in revenues. They reorganized, cut circulation, reduced travel, instituted layoffs, eliminated glossy covers and worried that it would never end. But in each case, it did end. (And the Dow Jones averages recovered as well—in only two years after the 1987 crash, but it took more than four years after 2001.)
And so we’re at it again. Only this time, it seems like it might be different, that there are structural abnormalities in the financial system, and in the consumer psyche, that will take us deeper into the depths of recession and last longer, perhaps much longer.
Is It Really Different This Time?
Frankly, I don’t know how different it is. In past downturns, companies went out of business (anybody remember Pan Am Airlines or Home Savings and Loan) or were bought up at discount prices. But certainly not like the parade of notables we’re seeing today: Lehman Brothers, Wachovia, Merrill Lynch, maybe even General Motors. Financial and automobile advertising are the mainstay for many of us.
Whether we are in a shallow, short-lived recession, or a deep, long-lasting one, it’s not easy to operate a media enterprise in the face of so much uncertainty in the economy. In addition, the dramatic movement from traditional advertising to new media continues unabated and “old” media has to innovate and invest in order to compete effectively.
What to do in the face of such uncertainty and structural change?
It’s time to take a look at your business and decide what is truly essential. “Nice to have” is no longer worth keeping. A useful exercise I’ve used in past recessions, and borrowed from McKinsey and Co., is to determine how you would run your business if you had to reduce expenses by 40 percent. The 3 percent to 4 percent cuts are easy, but if your cost base is going to be almost cut in half, you’ll have some hard discussion about what is essential to your mission.
As the perceived value of print advertising slides, it is important to evaluate your circulation strategy. If advertisers want to pay less for print, they may have to accept reaching fewer readers.
Don’t Just Talk Online, Be Online
At the same time that you are considering major expense reductions, it can seem almost impossible to try to inspire and spark innovation. But innovation and investment is absolutely necessary for long-term survival, particularly in the midst of the structural revolution we are experiencing in consumer and advertiser behavior. Between 2001 and 2006, consumer magazine advertising increased 1.2 percent annually and business magazine advertising was up 4.1 percent, while the online alternatives were up 20 percent and 14 percent respectively, according to investment bank the Jordan, Edmiston Group.
If your Web sites are static, if you’re not experimenting with social networking and multimedia, if you’re not thinking of new ways to monetize the data that you collect, there won’t be much left of your business in a few years, maybe even sooner.
So while you are reducing staff and expenses in one area, you should be willing to pay top dollar to the few talented executives and editors who really understand the Web.
It takes more than talking a good game. CEOs need to feel a part of the electronic revolution and actually spend time on the Internet. Discover the latest experiment on some college campus, or even watch You Tube’s latest upstart competitor. It is not only legacy editors that can slow you down, but legacy CEOs as well.
In short, as the executive leader at your media company, you have to provide stability but demand change, inspire risk-taking, but play it safe, cut costs while growing market share. No one ever said it would be easy.
Tuesday, February 24, 2009
If anyone else knows how to fix this problem, please let me know....in a comment, if you can.
Sunday, February 22, 2009
There are some great experiments. Paul Steiger's pro publico. The Center for Investigative Journalism is raising money to fund a Sacramento bureau. And now, there's a web site, spot.us that gets readers to "bid" on stories, and agree to make small payments to help fund investigative journalism. Here's LA Times' Jim Rainey's take
Seems like a bit of a stretch. But worth watching.
JOUR M02 Writing and Reporting for the Media: Former L.A. Times Publisher
Will Run LDS Holding Company
Saul Daniels blog spotted this news item about Mark Willes, former CEO of Times Mirror and Publisher of the Los Angeles Times. Called the "Cereal Killer" by the NY Daily News because of his decisions to shut down New York Newsday and the afternoon paper in Baltimore, as well as his background as an executive at General Mills, it's amazing to think that newspaper folk may now look back fondly at his era.
Thursday, February 19, 2009
When I left the Los Angeles Times in late 1998 to start a new magazine and internet publishing company, I never imagined how bad it could get at my long time employer. I had spent 15 rewarding years at the paper in a variety of legal and management positions. I knew the Times was caught in a time warp, refusing to recognize the real and serious threat of the internet. I knew it was a slow-moving aircraft carrier where committees and departmental fiefdoms slowed down decision making. I knew it was arrogant and didn’t care enough about the changing reading and buying habits of its readers. But I never expected it would be part of a company filing for bankruptcy.
In retrospect, it is easy to see where the newspaper industry, and the Los Angeles Times in particular, went wrong. The Times once had more than $350 million in classified advertising revenues, about 35% of its total revenue pie and the most profitable part of the newspaper. On a stand alone basis, the classified section actually made more money than the entire newspaper. Classified was dependent on real estate, help wanted, and automotive advertising, three of the categories that were to become the most successful on the world wide web.
In the 90’s in the newspaper industry, we paid lip service to digital media, and wasted money and time on partnerships, experiments and lots of talk. But we failed to actually internalize the real threat to revenue streams; we were more concerned about cannibalizing our existing dollars than going full bore into new enterprises. It’s the same reason why it was Apple that created a paid online music system, not one of the music labels.
Even now, with several newspapers in or facing bankruptcy, and an economic slide that has accelerated the inevitable shift to digital media, there are still many legacy publishers and editors unwilling to embrace the new era, with its changed readership and habits. Newspaper journalists--for all the “change” that they cover--are an incredibly conservative bunch who themselves are often unwilling to embrace change.
There are some things that newspapers publishers in general, and the Los Angeles Times in particular, should be doing to insure survival. First, acknowledge that print is dying. It is not a question of “if” it will die; it is only a question of when. It may not be in a year or two, and it will never completely disappear, but print simply ain’t gonna last as a viable self contained profitable medium. Internalize that, and you’ll make different decisions across the board.
The Los Angeles Times never grew up and decided what it wanted to be—it always wanted to be “all things to all people”. That was bad enough in the eighties, when the primary competition was the Orange County Register, but today, with competition from every corner of the world, it just won’t fly. The Times couldn’t decide whether it was a paper focused on the epicenter of the “Pacific Rim”, as one regime put it, or wanted to compete with the New York Times coverage of
The Los Angeles Times should be able to exploit its brand name, journalism excellence, story telling and analysis capabilities and survive financially and journalistically, delivering a news and information product to readers in ways other than print on paper.
With that in mind, there are many short term efforts that will shore up profits, and maintain cash flows to fund innovation and development of an effective digital delivery system of great, but focused journalism.
In today’s blog, I won’t get a lot into the ways to improve on the web, but here are a few of the difficult, but critical steps, the paper should make to de-emphasize print and insure long term health and growth.
· Dramatically raise print circulation price—double or triple them--let circulation slide to a profitable level, and have users pay more of the cost of printing and distributing the print product.
· Simplify advertising pricing—its way too complicated; media buyers don’t understand it. It will also make it easier to sell, and require fewer sales people.
· Eliminate editorial zoning—do your geographic and demographic customization on the web site.
· Standardize production—limit pages, rethink section configuration, do everything necessary to reduce the number of press runs and related costs, even if you have to turn away advertising (but then try competitive pricing bidding for the scarce resource--print pages).
· Decide what kind of news coverage you do best, what’s really exclusive, invest in it, but rely on other providers for the rest. Take a lesson from blogger and journalism professor Jeff Jarvis, who has offered up a strategy for building a news room from scratch, and other ways to think about new business models.
· Develop new revenue streams. The B2B media has been using webinars (online training), white papers, email newsletters on niche topics, microsites and a slew of creative efforts to attract web advertising. Newspapers need to do a lot more of this, exploiting all the great content they already have.
I’m glad I no longer work at a newspaper. It’s been a difficult and depressing decade for newspaper employees in the ten years that I’ve been away from the business. But it doesn’t have to be. Make the hard decisions. Size the staff to the realities of today. And then join the digital world. There are so many important stories that can be told with new technology, networking abilities, reader contributions and multimedia.
Wednesday, February 18, 2009
I've been on Facebook for years and even started twittering a few weeks ago.
So I guess I'm "somewhat" prepared for the world of blogging. In this blog, I'll be writing about the changing media business, but from a business perspective. What business models work, what key metrics drive the business, how it is changing, and what it will mean to consumers, to advertisers, to society.
I'll try to share what few insights I have, and link to others who provide thoughtful, incisive commentary.
We're in a media revolution.
The editors are no longer gatekeepers. The amount of information we can consume is intense. There are no more geographic boundaries. At the LA Times, I spent a year leading a task force to develop a local news "zoning" strategy. We decided we needed 44 different zones to adequately provide local customized news in Southern California. But we couldn't cost effectively print and deliver 44 different sections every night. It almost seems quaint now,doesn't it? Because SoCal is much more than 44 different communities, it is made up of literally hundreds of geographic communities and countless more demographic ones. The Times can't print 44 different sections, but the web can provide hundreds of even smaller zoned, personalized news sites.
Figuring out how to create news and information sites that have sustainable, profitable business models is the challenge.
So we begin.